Geopolitical tensions in the Middle East, particularly those involving the US, Iran, and Israel, maintain the demand for safe-haven assets high, which is keeping precious metals in a bullish momentum. China and Russia are the two central banks that are still hoarding physical gold, and the Dollar Index’s stabilization below 105 provides another technical tailwind.
The rally has been mostly fueled by the threat posed by President Donald Trump’s aggressive tariff program to global economic development, but the recent spike in geopolitical risk has given it further energy. In 2025, gold has increased by almost 30%, and central banks’ attempts to diversify away from the dollar have been a major factor.
Over the weekend, Israel and Iran bombarded one another with missiles and drones, with the fighting raising energy prices and endangering regional transportation and energy infrastructure. The head of Iran’s Islamic Revolutionary Guard Corps, Major General Hossein Salami, and the chief of staff of the army were killed last week when Israel attacked Iranian nuclear installations and the nation’s military leadership.
Iran responded by firing missiles and drones at Israel, claiming that Israel had declared war. However, there are concerns that the battle may escalate, endangering the Persian Gulf oil supply and causing broader economic repercussions that might reinforce the precious metal’s price.
What was once classified as tail risk—a speculative “what if everything goes wrong” situation—is now a live-wire reality. There is no fat tail here. There are teeth on this tail. Like a war tax, a geopolitical premium has been imposed on every barrel, and traders are adjusting more quickly than you can say “South Pars.”
In a traditional safe-haven move, gold increased in value alongside the dollar after the Israeli attack. It remains to be seen if the attack was the catalyst that rekindled the gold market and sparked a new surge towards over $3500. Nonetheless, it appears to be the least difficult course of action when combined with central bank demand, worries about fiscal debt, and improving US economic data that suggests rate decreases.
Three pivot points are currently being watched by markets: To what extent will Iran respond? Will proxies and patrons be involved, or will this be a bilateral matter? Will American assets be directly targeted or even seen as such? As soon as Washington becomes involved, even through rhetoric, we can anticipate a spike in oil prices and an increase in gold prices due to demand for safe-haven assets.
Since US President Donald Trump will be imposing tariffs on trading partners in the upcoming weeks, investors are also anticipating further details about his tariff plans.
Technically speaking, gold prices are above the $3410 (~Rs 99000) resistance zone, which corresponds to the upper bound of the rising wedge formation. The April ATH of $3500 (~Rs 101,500) may reappear if a move above this zone opens the way for last week’s high around the psychological level of $3468 (~Rs 100,700). A violation of this zone might open the door for the next significant psychological milestone of $3270 (~Rs 92500) if bearish momentum is to acquire traction.
Dr. Renisha Chainani, Head – Research at Augmont
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